How did Swiss Banks Become The Hotspot For The Rich and Criminals

by hridika ahire

How did Swiss Banks Become The Hotspot For The Rich and Criminals

April 20, 2021

I will tell you the secret to getting rich on Wall Street. You try to be greedy when others are fearful. And you try to be fearful when others are greedy.

- Warren Buffett

Money! Money! Money!

Do you believe that money can’t buy happiness? While some may believe that money can’t buy happiness, the world definitely runs on money. Beyond food, shelter, and clothing, Money helps us in getting a good education, health care, adventure, and fun. Having money can give you the freedom to go anywhere, do anything you desire. But having money does not mean it is all rainbows and unicorns. While having money is a good thing, too much or too little money is dangerous.

So many crimes and fraud are committed for the sake of money. If a person has too little money, then he steals and borrows from people and you can never know what the person that’s helping you intends to ask for, in return. He can make you do series of crimes which then become a lifestyle. The same can be said about the people who have a lot of it. When a person has a lot of money, he/she spend a lot as well. It becomes a habit and when the person runs out of money, he tends to commit a lot of fraud to keep up the façade.

The world runs on Money; So yeah money can buy happiness.

Crimes At Banks

Banks are a hotspot for crimes and frauds. In 2017, as per the data collected from 79 countries, 105 robberies have taken place per 100,000 people. Since 2019, consumers have reported more than $3.3 billion complaints related to frauds out of which 34 percent of the money was lost. While banks are still considered the safest place to store your money and jewelry and with so many banks available for use, have you ever wondered why do the rich and criminals put their money in the Swiss Bank?

Swiss banks are considered the most reliable and attractive banks amongst the others. The reason for this is because the Swiss economy is the most stable economies in the entire world. They have a reputation for anonymity and safety, despite the fact that the stringency around Swiss banks has been diluted greatly. Despite this, Swiss banks maintain the utmost secrecy, making it mysterious to people who aren’t in the financial sector. Swiss banks serve as political tools as well against governments whose ministers are accused of hiding their black money or unaccounted money in the Swiss banks.

Swiss banks maintain the utmost secrecy, making it mysterious to people who aren’t in the financial sector.

Secrecy of Swiss Banks

The reason for this secrecy is the Swiss Banking Law of 1934. According to this law, it is criminal for Swiss banks to disclose the name of any of their account holders. You can think of it as the confidentiality agreement between doctors and patients, or lawyers and their clients. This protection makes it the prime choice of the people who want to keep their money hidden and their identities unknown.

Ashish Shanker, Head of Investments at Motilal Oswal which is a financial services company, also worked for Sarasin and 1841-born Swiss bank that briefly ran operations in India, says that “Even though banking began in Italy, it was the Swiss who defined what is modern banking today. From numbered accounts to secret vaults and cutting-edge technology, the Swiss were responsible for introducing all of this and more to the banking sector.”

According to Swiss bank law, it is criminal for Swiss Banks to leak their account holder's name.

Big Mountains Make Big Vaults

Since the Swiss have traditionally been bankers, first to the rich, famous, and the dubious of Europe and America, it was imperative that they become more advanced not just in tech and process but also legally. The Swiss were always neutral and wanted no part in all the conflicts including the World Wars which is why Swiss banks quickly became the bankers of the world. Due to the mountainous terrain of Switzerland, it was easier to create super-sized secret vaults. This attracted Emperors, Dictators, Leaders, and businessmen from Axis as well as Allied powers.

The banks also put high-tech processes in place that ensured the anonymity of their clients. The secrecy was so high that only the private banker and a few high-ranking managers had access to the identity of the clients. Over the years, Swiss laws made it impossible for anyone to find out if someone had an account in a Swiss bank, let alone the details of the account. This makes the banks’ primary choice when it comes to tax evasion and tax fraud and difficult for governments to chase criminals.

Leak At The Swiss Banks

Many countries tried to pressure Swiss banks into revealing the account holder’s details over the decades. The most prominent amongst all was the U.S. Their battle with the Swiss banks started in the 70s because they were trying to cease the funding of drug cartels. Ashish said, “This resulted in Swiss banks agreeing to not accepting drug or crime money. Things got even more heated after 9/11 after the U.S. got the banks to disclose accounts linked with suspected terror activities.”

It was leaked by HSBC Private Bank in 2009 that 65 public figures had a Swiss account. Amongst the beneficiaries was Mexican billionaire Carlos Hank Rohn who had $158 million stored in the bank in 2007/2007. King of Jordan, Abdullah II ibn al-Hussein also held an account with $41.8 billion in the same year. Actor John Malcovich, Actress Joan Collins, Fashion Designer Diane Von Furstenberg, Soccer player Diego Forlan and many other people were named in the list that was leaked.


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